PARIS, France – Danone reported on July 26, 2023, its second quarter results. Consolidated sales stood at €7.2 bn, up +6.4% on a like-for-like basis, with a +8.7% contribution from price and a -2.3% contribution from volume/mix. On a reported basis, sales increased by +2.4%, reflecting notably a negative impact from forex (-4.3%) and scope (-0.4%), and a positive contribution of hyperinflation (+1.3%).
In H1 2023, consolidated sales stood at €14.2 bn, up +8.4% on a like-for-like basis, with a +9.4% contribution from price and a -1.1% contribution from volume/mix.
On a reported basis, sales increased by +6.3%, notably penalized by a negative forex effect of -2.0%, reflecting in particular the depreciation of various Asian and Latin American currencies against the euro.
Reported sales were also impacted by a positive contribution of hyperinflation of +1.3%, and a slightly negative scope effect of -0.5%.
In the second quarter, Europe sales were up +6.5% on a like-for-like basis, with price up +11.7% and volume/mix down -5.1%. Growth was led by France, Poland and Spain, while Germany progressively recovers after several months of supply disruptions and temporary delistings. By category, Specialized Nutrition and Waters registered resilient growth, while EDP made further progress in its portfolio transformation.
In North America, sales were up +5.0% on a like-for-like basis, with price up +7.7% and volume/mix down -2.7%. Growth was led by Yogurt, Coffee Creations and Waters, with Oikos, International Delight, Stok and evian growing at a double-digit rate, while Plant-based is lapping a high base of comparison. Specialized Nutrition also lapped the high base of last year driven by the shipments realized in the context of Operation Fly Formula.
China, North Asia & Oceania posted sales growth of +9.6% on a like-for-like basis, led by +0.8% growth in price and +8.8% growth in volume/mix. In China, Aptamil continued to deliver solid growth in Infant Nutrition, coupled with further market share gains, while Nutrison and Neocate posted strong growth in Adult Nutrition and Pediatric Specialties respectively. In Waters, Mizone registered mid-teens growth, driven by volumes, with market share gains, while in EDP, Japan delivered another quarter of double-digit growth.
Latin America posted sales growth of +10.8% on a like-for-like basis, with a +12.9% increase in price and a -2.0% decline in volume/mix, led by Danonino and Danette in Mexico and by Danone and Yopro in Brazil.
In the Rest of the World, the performance normalized in the second quarter, after favorable calendar effects in Q1. Sales were up +3.9% on a like-for-like basis, with price up +8.2% and volume/mix down -4.3%, led by key Specialized Nutrition platforms.
Danone’s recurring operating income reached €1.7 bn in H1 2023. Recurring operating margin stood at 12.2%, up +14 basis points (bps) compared to last year.
Other operating income and expense reached -€53 million in H1 2023, vs -€233 million in the prior year. Reported operating margin was up +152 bps, from 10.4% to 11.9%.
Share of profit of equity-accounted companies stood at €33 million, mainly reflecting the gain on disposal of the 25% stake in Yashili in H1 2023, improving from -€89 million last year, which reflected the impairment related to the disposal of the remaining minority investments in Mengniu partnerships.
As a result, Reported EPS increased by +48.3% to €1.70, while Recurring EPS was up +7.6% to €1.76.
Danone: Cash flow and Debt
Free cash flow reached €1,124 million in H1 2023, increasing from €674 million in H1 2022, reflecting the significant increase in cash-flow from operating activities. Capex stood at €310 million.
As of June 30, 2023, Danone’s net debt stood at €11.2 bn.
2023 guidance reiterated: like-for-like sales growth between +4 and +6%; moderate improvement in recurring operating margin.
